Offsetting Measures to Counter Unpopular VAT Hike
In a strategic move to balance public sentiment, the Christodoulides government has orchestrated a series of offsetting measures aimed at softening the blow of the recent VAT cut expiration on car fuel. With the cut set to end on March 31, the administration called an urgent council of ministers meeting to deliberate on actions that would be favorably received by the populace.
Finance Minister Makis Keravnos revealed that the government would extend the electricity bill subsidy for an additional two months, a decision poised to aid approximately 400,000 households and 100,000 businesses. Despite the subsidy translating to an average saving of €16 per household over two months, it represents a tangible effort by the government to alleviate the financial burden on citizens. The total cost of this extension is estimated at €8 million.
Additionally, Keravnos announced the prolongation of zero VAT on essential household items, including bread, vegetables, meat, milk, nappies, and baby food until the end of June. This measure is expected to save consumers around 8 percent on a €100 shopping basket, although the exact savings are debatable. The financial impact of this extension is calculated at €6 million.
The government’s strategy also includes direct pay-outs to families receiving state benefits, individuals with mobility allowances, and low-income pensioners. The cumulative expense of these offsetting measures amounts to €35.3 million—an expenditure that Keravnos assures is within the state’s financial capacity.
Despite these efforts, opposition parties remain critical, voicing concerns that the middle class has been overlooked and advocating for an extension of the fuel price cut. Both Disy and Akel have expressed dissatisfaction with the measures, highlighting the challenges faced by non-vulnerable members of society.
The Christodoulides administration maintains that its primary goal is to enhance the quality of life for ordinary citizens. As debates continue and public opinion remains a key concern for the government, it is likely that additional offsetting measures may be on the horizon to further address economic and social issues.